What does this guide contain?
The guide provides you with practical VAT information for Luxembourg:
- Your VAT registration in Luxembourg
- Your VAT obligations TVA in Luxembourg
- The invoicing rules in Luxembourg
- A VAT credit refund in Luxembourg
VAT REGISTRATION IN LUXEMBOURG
When do you have to register for VAT?
It is mandatory for your company to apply for VAT registration with Luxembourg authorities before starting your activities. Financial penalties may apply if the application for registration is submitted late.
What documents do I need to provide when I register?
If your company wishes to register for VAT in Luxembourg , it is essential to contact the Luxembourg tax authorities. There is no need to contact the tax authorities in your country of establishment.
In particular, your company will need to submit the following documents:
- The VAT registration form(s) completed in the language of the country
- A copy of the articles of association
- An extract from the trade register
- A certificate of VAT liability
- Power of attorney (if using a fiscal agent)
- Proof of activity on the territory of the country concerned: a contract, an order form, etc.
The Luxembourg tax authorities may require some of these documents to be translated.
How long does it take to get a VAT number?
If your file is complete, it generally takes one month to obtain the VAT number from the competent Luxembourg tax office.
Is a fiscal representative necessary?
Luxembourg VAT authorities may require non-European companies to appoint a fiscal representative. This is a local company that will represent you to the local VAT authorities. He is responsible for the respect of all your VAT obligations, including those of which he was not aware. For this reason, he may require a deposit (e.g. a bank guarantee) from you before accepting the representation assignment.
European companies are not obliged to appoint a tax representative. However, to facilitate their relations with the local tax authorities, they may appoint a proxyholder to carry out the tax formalities on their behalf. In this case, it is not necessary to issue a bank guarantee. The company remains solely responsible for paying its VAT debts.
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VAT OBLIGATIONS IN LUXEMBOURG
Is it necessary to keep VAT accounting ledgers?
Your company must keep ledgers sufficiently detailed to enable the application of VAT and its control by the Luxembourg tax authorities.
When do you have to file a VAT return?
Your company has to report its VAT position by filing periodical VAT returns either every month, every quarter or every year depending on your annual turnover of the preceding year.
The VAT return must be filed electronically before the 15th day of the month [15 of N+1] following the tax period. Annual return is due by February 28th.
The VAT expert's eye
Member States set the duration of the taxable period at one, two or three months. However, they may set different periods provided they do not exceed one year. The VAT return must be submitted within a period to be determined by the Member States. This deadline may not be more than two months after the end of each taxable period (Art. 250 of the VAT Directive).
Do I have to submit an annual return?
Your company is required to file an annual VAT return. The Statement should be filed before April 30th of the next year.
The VAT expert's eye
Member States may require the taxable person to file a return containing all the data referred to in Articles 250 and 251 and concerning all transactions carried out during the previous year. This return shall include all the information necessary for any adjustments. They authorize, and may require, the return to be made by electronic means under conditions which they determine (Art. 261 of the VAT Directive).
What is the deadline for paying Luxembourg VAT?
The company must pay the VAT due no later than the deadline for the VAT return to which it relates
Interim payments are not required.
The VAT expert's eye
Every taxable person who is liable for the tax must pay the net amount of VAT when filing the VAT return. Every taxable person who is liable for the tax must pay the net amount of VAT when submitting the VAT return. However, Member States may set a different deadline for the payment of this amount or collect instalments (Art. 206 of the VAT Directive).
When should the intra-EU statement be filed?
The recapitulative statement [ESL] must be drawn up for each calendar month.
Taxpayers can however opt for filing the statement on a quarterly basis provided the threshold of € 50.000 is not exceeded. The statement has to be filed by electronic means before the 25th day of the month following the reporting period [month/quarter] to which it relates.
The eye of the VAT expert
A recapitulative statement is drawn up for each calendar quarter within a period and according to procedures to be determined by the Member States. However, Member States may provide for recapitulative statements to be submitted on a monthly basis. Member States may allow, and may require, recapitulative statements to be submitted electronically under the conditions they determine (Art. 263 of the VAT Directive).
INVOICING RULES IN LUXEMBOURG
Does the invoice have to include VAT? Reverse Charge?
As a supplier of goods or services, your company is normally obliged to issue an invoice with VAT to its customer. This is the general rule. However, there are many derogatory situations which transfer this obligation to pay tax to the customer himself. These situations are known as "reverse charge" situations.
The special reverse charge rules have not been introduced in Luxembourg for foreign companies:
For supplies of goods:
Reverse charge does basically not apply to supplies of goods carried out by suppliers not established in Luxembourg.
For supplies of services:
Reverse charge does basically not apply to supplies of services carried out by suppliers not established in Luxembourg.
What are the mandatory mentions on an invoice?
The VAT Directive lays down the minimum information that you must include on your invoice. In some cases, countries may add additional compulsory information. Particular attention should be paid to the conversion rates when the currency used on the invoice is not that of the country in which the transaction takes place, and to the specific statements justifying the legal reason why VAT is not charged.
What VAT rate should be mentioned on an invoice?
Luxembourg has 4 different VAT rates :
- Standard rate : 17%
- Intermediary rate : 14%
- Reduced rate 1 : 8%
- Reduced rate 2 : 3%
VAT REFUNDS IN LUXEMBOURG
How can I recover VAT in Luxembourg ?
There are several methods to obtain refunds of Luxembourg VAT. The practical formalities for reclaiming foreign VAT will differ depending on whether or not your company is established in Europe and/or is identified for VAT in Luxembourg:
- If your company has a VAT number in Luxembourg, it will have to submit a refund application in the form and within the timeframe required by local regulations. A VAT credit is in principle automatically carried forward to the next period, unless a tax refund has been applied for.
- If your company is established in a European country and does not have a VAT number in Luxembourg, it will have to apply for a VAT refund electronically from its country of residence, in the form and within the time limits required by Directive 2008/9.
- If your company is established outside Europe and does not have a VAT number in Luxembourg, it may have to appoint a tax representative to submit its refund application in the form and within the time limits required by the 13th Directive.
Is Luxembourg VAT recoverable on all expenses?
VAT incurred on purchases, imports or intra-Community acquisitions of goods and services can be reclaimed by a foreign company provided that these expenses are for taxable activities and provided that the appropriate documentation is available.
No input VAT can be recovered on any of the following expenses:
- Catering and restaurant services.
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